One of Wall Street's biggest bears just doubled his bitcoin forecast to $11,500

Tom Lee of Fundstrat has nearly doubled his forecast
for bitcoin, calling for the cryptocurrency to hit $11,500 by
mid-2018.

Lee says that a recent dip in bitcoin's price wiped out
weak, low-conviction holdings, clearing the path for further
gains.

Well that sure escalated quickly.

Tom Lee, the managing partner and head of research
atFundstrat Global
Advisors, has almost doubled his forecast for bitcoin. He now expects
the scorching-hot cryptocurrency to hit $11,500 by mid-2018, up
from his previous estimate of $6,000 released in August.

The adjustment comes just a few weeks after Lee turned neutral on
bitcoin, when it was hovering around the $7,400 level. At the
time, he felt that there were simply too many "weak hands"
holding the cryptocurrency with low conviction, leaving it
susceptible to a sharp drop at the first sign of turbulence. In
his mind, the appropriate level to start loading up on more
bitcoin was around $5,500.

And sure enough, bitcoin fell last week to $5,600, which Lee says
wiped out those fickle holdings and allowed him to resume his
bullish view.

"This move to $5,600 cleaned up weak hands and we no longer feel
caution is warranted," Lee wrote in a note to clients on
Wednesday.

Further, two variables that explain 94% of
bitcoin's historical moves — according to a statistical model
developed by Lee — have rebounded, further fueling his optimism.
Those variables are unique bitcoin network addresses and
transaction volume per user, which, when regressed against the
price of bitcoin, can provide signals suggesting possibilities
for the future direction of the cryptocurrency.

The price of bitcoin
compared with the projected value of bitcoin, based on the
FundStrat model using unique addresses and
transactions.Fundstrat

Lee is also optimistic about the coming launch of
bitcoin futures, which many think will increase the
cryptocurrency's legitimacy, thereby expanding its potential user
base. Bitcoin hit a new record on the news. Lee does warn,
however, that the use of futures could further concentrate mining
power.

Looking beyond bitcoin, Lee is one of the most bearish analysts
on Wall Street when it comes to the stock market. He sees the
benchmark S&P 500 ending 2017 at
2,475, which puts him in the bottom quartile of strategists
surveyed by Bloomberg. The average price target is 2,524.